Relax! UK cultural tax breaks isn't all bowler hats and red phone boxes


There's been a curious degree of resistance towards new proposed methods to introduce tax breaks for the British games industry. Most of it centres on new requirements that games need to be 'culturally British' in order to qualify.

The 'cultural test' in its current form scores a game project out of thirty with regards to how many requirements it fulfils. Points are scored for things like a game being made in the UK, or for hiring British talent or - yes - for setting the game in the UK.

It is understandable that some feel that such requirements will unnecessarily impact on the creative options for games developers. Suddenly, goes the theory, games will need to introduce arbitrarily British elements in order for UK studios to meet the criteria.

Rest assured, these fears are irrational. The cultural test will not have a noticeable impact on games. It will, however, pull the UK out from its workforce and investment slump and rebuild the nation as an essential part of the global games industry.

It's relatively unknown that Quantic Dream's acclaimed PS3 project Heavy Rain qualified for games tax breaks under the same set of cultural rules. Let's not forget: Aside from the occasional Frenchisms of a few voice actors, Heavy Rain was hardly a game about a Beret-wearing Garlic ogre climbing the Eiffel.

And Beyond: Two Souls - the PS3 game which focuses entirely on a character played by Canadian actress Ellen Page - has also successfully applied for tax breaks.

The cultural test allows for significant flexibility and some circumvention. Though the maximum score is thirty points, the minimum threshold is sixteen, which in many cases will be automatically be achieved by virtue of a game being made by Britons in a British building with use of the English language. This hardly gets in the way of creative options.

Also worth noting that this test means that overseas companies can't benefit from tax breaks unless they hire enough UK residents to work in UK offices - this will only help investment be directed back to Britain.

I think it's the word 'cultural' that has thrown some people. It's suspected there's an intent to proliferate British sensibilities into games which, let's face it, are already plagued by commercial restraints and mandatory online modes.

So think of 'cultural' as more a legal term. A bit of background: It is by convention illegal for any EU country to give industries a helping hand through tax relief. This is because state aid is deemed unfair on any other EU countries that may not be able to afford such benefits.

But in a game of 'EU Law Top Trumps', cultural satisfaction is a bigger card than unfair competition. So, countries like France and institutions like the British film industry have successfully argued that state aid is necessary for something that is culturally relevant.

There is another reason why the UK Culture Department has opted for the cultural test. In 1992, the European Commission's army of lawyers poured over the Film Tax Credit policy. It was an agonising process, but when finally accepted, it set a precedent that such tax break policies were permissible elsewhere in Europe.

So in 2006, games industry lobbyists in France requested the same benefit under the same guidelines - meaning that the policy could be introduced quickly and with relatively less resistance.

Today, the UK games sector is opting for that same cultural test as a matter of urgency. The British games workforce has contracted significantly in past five years, yet publishers are still investing significant sums of money elsewhere. The scales have tipped in favour of Canada, and investment is lurching in that direction. Britain needs to take quick action to make sure it can tip the scales back in time.